An automotive lien holder is a person or company that owns all or part of a car, usually because the person whose name is on the car title borrowed money from the lien holder. Nearly all auto loans are secured loans, meaning that the lender places a lien on the car as security in case the borrower fails to repay the loan.
Identification
The name of the lien holder usually appears on a car title in the section that lists security interests. When the lien is removed, the car owner receives a new title that doesn't list a lien holder. If you don't have access to the car title, contact the department of motor vehicles in the state in which the car is titled to find out if there is a lien holder listed. You'll need the Vehicle Identification Number (VIN), usually located on the driver's side of the car dashboard.
Ownership Rights
The lien holder has partial ownership rights over the vehicle. The lien usually spells out in what circumstances the lien holder can seize ownership. For example, a lender might specify that if the borrower is at least 10 days late on a car payment, the lender can repossess the vehicle. The lender then sells the vehicle and uses the proceeds to repay the remaining loan balance. Any remaining proceeds, minus administrative costs, are returned to the borrower.
Lien Release
The main way to be released from an automotive lien is to pay off the loan in full. After the lien holder processes the final loan payment and ensures that there is no more balance on the loan, the lien holder releases the lien. The car owner receives a new title that no longer lists a lien holder. In some cases, a lien holder might accept partial payment of the loan and agree to release the lien. This is rare, though, and generally doesn't occur unless if the partial payment is more than the lien holder would receive from repossessing and selling the car.
Selling the Car
When you're selling a car with a lien on it, you must take extra steps in the sale process. Contact your lender to find out exactly how much you owe on the loan and discuss ways to release the lien. If you can't afford to pay off the balance, you might need to get another short-term loan to pay off the car loan and get the lien released. Another option is to conduct the sale at the lender's office and have the buyer pay off the remainder of your loan as part of the purchase.
0 comments:
Post a Comment